Gold Price Action at Long-term Resistance Points to Pullback
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Gold Price Technical Outlook:
- Gold ran into the thick of long-term resistance
- Posted a volatile long-legged Doji candle
- Only a pullback, consolidation expected for now
For an intermediate-term fundamental and technical viewpoint, see the Q3 Gold Forecast.
Gold ran into the thick of long-term resistance
The long-term wedge breakout in June suggests gold has room to rally to around 1700 or higher, but it won’t happen in a straight line, so a set-back here and there would be normal. Now looks as good as any for one of those set-backs to develop.
Gold was continuing its impressive rally yesterday before taking a strong turn lower on a positive twist in the Trade War. The sudden turnabout was timely too, with it developing in the long-term resistance zone penciled in from when gold underwent a topping process after the 2011 peak.
The zone ~1522/1575 coupled with an overly bullish market is making for a solid case in favor of weakness. Price, the final arbiter, is now supportive of the case. Yesterday’s volatile wide-range trading session resulting in effectively a net-zero return created a ‘Long-legged Doji’ candlestick.
These candles highlight a strong push-pull between both sides of the market and often mark an important inflection point. We could see the upper bound (1535) of the Doji tested before prices begin to fall back, but some type of decline/consolidation is anticipated to develop in the near to intermediate-term.
Looking lower, there is a trend-line (that has an upper parallel) that runs up from late May, it’s about $50 lower at this time in the 1450s. This could make for a compelling spot for would-be longs to enter on weakness for another swing up to resistance or higher. Should we see gold push beyond the 1535 high, gold will still be at risk of turning lower until it can rise above the top of the resistance zone.
Gold Price Weekly Chart (2011-12 levels)
Check out the IG Client Sentiment page to see how changes in trader positioning can help signal the next price move in gold and other major markets and currencies.
Gold Price Daily Chart (volatile candle marks inflection point)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.